Archive for June, 2011

According to the RFP recently issued by the Brownsville Independent School District for group health insurance third party administrator, the district will select an agent through a formal Request For Qualification process. (See Section 5.1 of the RFP) However, it is unclear when the RFQ process will be initiated.

The commissions recommended by the district to be earned by the agent are clearly stated in the RFP: $1.75 per employee per month plus 15% commission on the stop loss insurance.

This could be a pay cut for some agents. Many are used to earning commissions and fees from the pharmacy benefit manager, PPO network, disease management program, and other revenue streams such as a percentage of the PPO discounts and “reinsurance placement fees”, etc. A group the size of BISD can earn an agent substantial commissions.

Of course, the BISD recommended commission schedule are recommendations only. Total estimated commissions and fees based on the district’s suggestion comes in about $350,000 per year.

Brownsville ISD is an anomaly. Most large employer groups do not employ an insurance agent or broker anymore. Instead the vast majority of employers these days rely on expert licensed consultants paid on a fee basis. To employ both an agent/broker and a consultant at the same time makes no sense. Whose on first? Whose on Second?

Cameron County and the City of Brownsville do not employ an insurance agent or broker. Neither do most of the other school districts located in deep South Texas.

The problem facing agents and brokers is that they are hard put to explain and justify just what they do to earn commissions on group health plans these days. The good news for many insurance agents is that some employers really don’t know what their agent is earning off their account. What may be represented as the commissions to be paid, may be understated. Bonus’s, overrides and other compensation streams may never be disclosed.

It is apparent that BISD sees the need to continue to pay an insurance agent. A formal Request for Qualifications will bring forth many interested local insurance agents vying for the commission dollars placed before them by the taxpayers.

It will be interesting to see what services will be required of the successful insurance agent/broker ultimately hired by the district. Perhaps the benchmark should be based on the services provided currently with the fees/commisions to be paid directly proportional to the services recieved. No service, no pay is one model to consider.

Brownsville Independent School District is currently seeking competitive proposals for third party administration of their self-funded health plan. Proposals are due July 12, 2011.

A careful review of the proposal specifications will be entertaining to many in the business. We suspect Homer G. Flansworth, famed author of “How To Discourage Vendors From Bidding” may somehow have co-authored this “work-in-progress.”

This RFP will be an interesting study for future reference.

Editor’s Note: Famed private investigator Molly Mulebriar is working undercover at the BISD administration building disguised as a computer. We look forward to her report.

Molly Mulebriar hit a home run again in her continuing undercover work and life long committment to expose the truth about hidden health care revenue streams that consumers unknowingly end up paying for in ever increasing health insurance costs.

Molly Mulebriar reports that a prominent South Texas insurance consultant has requested the Texas Department of Insurance to suspend his consulting license. Mulebriar reports that the license impedes successful endeavors to garnish business with political subdivisions in deep South Texas.

Unlicensed insurance consultants have recently been hired by several political subdivisions in South Texas over licensed consultants vying for the same business. At Willis ISD for example, during a recent board meeting one of the trustees stated that a consulting license is not needed and that to limit applicants to only those that have a consulting license restricts the process of selecting a consultant.

Do doctors really need a license these days, or attorneys, or CPA’s , or hunters and fishing enthusiasts? How about Southwest Airline pilots? To require a license to fly the plane would simply limit the airline’s pool of talent from prospective job seekers. To require doctors to have a license only limits the talent pool and we all know there is a serious shortage of doctors these days. Doing away with license requirements makes economic sense and may help with the current unemployment problem in this country.

Mulebriar reports that there may be one major problem with working as an insurance consultant without a license in Texas – E&O coverage does not cover illegal activity. If a unlicensed consultant makes a poor recommendation and is sued, the E&O cover may deny coverage since the “consultant” was acting illegally without the proper licenseing.

When asked, the deflated and soon to be unlicensed insurance consultant responded “It’s ok, Im going to buy my E&O from the same offshore company a local hospital bought from several years ago for wind and storm damange.”

Molly Mulebriar, private investigator and forensic auditor, reports that a Texas school district has recently hired an insurance consultant to advise the district on their self-funded health insurance program.

WASHINGTON (AP) — Removing a potential political distraction ahead of next year’s elections, the Obama administration Friday announced an early end to a health care waiver program that has come under fire from congressional Republicans.

“The California Vs Multiplan and Sutter Hospitals law suit is an unsettling yet long overdue acknowledgement of the unseemly relationship between hospitals and PPO networks set up to intentionally overcharge third party payers and their clients”………………………….”The no-audit language in PPO contracts is as ridiculous as it is grossly unfair and illegal and puts all fiduciaries associated with a health plan in harms way of severe punitive penalties”……..

Molly Mulebriar informs us that the Cost Plus Revolution enjoys continued growth among employer groups in San Antonio. She learned today that another large San Antonio employer will be going with the Cost Plus program effective January 1, 2012.

INDIANAPOLIS (AP) — Enrollment in high-deductible health insurance plans that can help consumers save for medical expenses climbed 14 percent this year and has jumped 87 percent since January 2008, according to the trade association America’s Health Insurance Plans.

Editor’s Note: The following was received from a San Antonio physician:

Bill, Sorry, but I’m not on board on this one. There are too many instances where TPA’s/MCO’s/Networks sell my discounts (if I give any) to others without my consent. If I give a discount to a particular network in exchange for access to a certain number of patients, I don’t expect them to ‘sell’, lend, lease, or whatever to a smaller NW or TPA that I otherwise would not have given a discount to. And it’s all been going on without my knowledge or consent. It’s happening all over the place in managed care contracts and workers’ comp contracts as well. The discount I offer to a particular NW, TPA or whomever, is between them and me, no one else, unless I consent to it. Any other sales of this information should be disclosed to me, and if they want to do that, then I should share in the money they’re making on this.

You can pass this to your friends in the industry. There are two sides to this stuff.

HARLINGEN — A Harlingen insurance broker has been sentenced to three years in federal prison for his role in a scheme to sell nonexistent windstorm policies to Valley Baptist Health System. Prosecutors said Michael N. Swetnam Jr., 47, helped to defraud VBHS out of more than $3.8 million by selling nonexistent and altered insurance policies.

Bid rigging and collusion is a common practice in bidding for group health insurance with political subdivisions in South Texas. It is so prevalent that the participants have come to believe it is “par for the course” and is “just the way things are done.”

James E. Huckaby has been named Public Risk Manager of the Year by the Public Risk Management Assn. Mr. Huckaby is director of risk management of the Mesquite Independent School District in Mesquite, Texas, a post he has held 17 years.

Arlington Va.,-based PRIMA gives the award annually to public risk managers who demonstrate innovation and commitment to the field.

He is credited in reducing the school district’s workers comp and automobile liability claim costs by 60% and 45%, respectively.

Mr. Huckaby accepted the honor at an awards luncheon Monday at PRIMA’s 32nd Annual Conference in Portland, Ore. “I stand here today because of the numerous professional opportunities made available by PRIMA,” Mr. Huckaby said.

Patient debt is big business. Purchase debt for pennies, collect dimes, nickles and dollars from medical debt deadbeats. We know of a dynamic person from the Lower Rio Grande Valley, who while at UT Pan AM, did a research paper on medical debt collection. He developed a business model that has made him millions of dollars. He approached a local hospital, offered to collect uncollectible debt for 25% of the take if the hospital would give him free office space and a telephone. That was 30 years ago. He now employs over 700 employees.

The Property Casualty world is different from the A&H world in many ways. For example, when you have lunch with a P&C carrier, You Pay For Lunch. But, when you have lunch with an A&H carrier, They Pay For Lunch.

This advertisement (CanadaDrugs.com) is in the June 2011 issue of Texas Co-op Power – Guadalupe Valley Electric Co-op. Importation of foreign Rx does not seem to be an issue apparently. This could be a heck of a mail order source for self-funded health plans if it is legal.

Any comments you have, or information that would be helpful here, please let me know. PBM’s- what do you think of the pricing in this advertisement? Consultants – have you checked out the legality of importing Rx for ERISA plans?

MulitPlan has acquired NCN, a company that touts medical cost transparency and accountability. This business model is at variance, in our opinion, to the business model practices of PPO networks (proprietary contracts, secrecy, behind-the-curtain agreements). Did the Cat swallow the mouse?